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In the slow-growing sporting-goods market,
Dick's Sporting GoodsDKS -0.9116067068207716%Dick's Sporting Goods Inc.U.S.: NYSEUSD60.87
-0.56-0.9116067068207716%
/Date(1481308994096-0600)/
Volume (Delayed 15m)
:
445623
P/E Ratio
21.086505190311417Market Cap
6919897074.757
Dividend Yield
0.9927797833935018% Rev. per Employee
206414More quote details and news »DKSinYour ValueYour ChangeShort position
looks like a winner. Sales at the 511-store retail chain have grown by an average of 17% a year for the past 10 years, enabling Dick's to claim 8.5% of the hotly contested U.S. market.

Dick's stock (ticker: DKS) has also been a high scorer, rallying more than 60% in the past five years, to a recent $49. The shares could reach $60 in the next 12 months, if Dick's continues to post mid-teens earnings growth.

The retailer is likely to report net income of $323 million, or $2.56 a share, for the fiscal year that ended in January 2013, on revenue of $5.9 billion. It could earn as much as $3 a share in fiscal 2014. "Dick's is a good long-term growth story," says Brian Lazorishak, who bought shares in November for his Chase MidCap Growth fund.

Based in Coraopolis, Pa., Dick's operates primarily in Pennsylvania, Ohio, and New York. It is the leading U.S. sporting-goods retailer, followed by
Foot LockerFL -1.553030303030303%Foot Locker Inc.U.S.: NYSEUSD77.97
-1.23-1.553030303030303%
/Date(1481308994237-0600)/
Volume (Delayed 15m)
:
626092
P/E Ratio
16.770474137931036Market Cap
10483308031.1127
Dividend Yield
1.4136092013108013% Rev. per Employee
162892More quote details and news »FLinYour ValueYour ChangeShort position
(FL), which controls about 6% of the market. Both companies have been stealing share from mom-and-pop stores and Sports Authority, which has yet to regain its footing after a buyout in 2006. Dick's counts
NikeNKE 0.07759456838021339%Nike Inc. Cl BU.S.: NYSEUSD51.59
0.040.07759456838021339%
/Date(1481308998443-0600)/
Volume (Delayed 15m)
:
2615193
P/E Ratio
23.27027027027027Market Cap
85840131181.9595
Dividend Yield
1.3937282229965158% Rev. per Employee
467369More quote details and news »NKEinYour ValueYour ChangeShort position
(NKE) and
Under Armour
(UA) as leading suppliers, and is benefiting from the growth of both brands.

Dick's expects to operate 900 stores before reaching saturation, almost double its current store base. Some analysts think the company could open at least 36 new stores this year, which would help power earnings growth. Wall Street's consensus forecast calls for earnings of $2.92 a share in fiscal 2014.

Lazorishak regards Dick's as one of the safest ways to invest in sporting-goods retailing, given the company's diversified merchandise mix, consistent earnings record, and strong balance sheet. Dick's boasted net cash of $272 million, or $2.16 a share, as of the end of October, after accounting for $22 million of debt and lease obligations.

Dick's pays a modest annual dividend of 50 cents a share, for a yield of 1%.

Dick's shares peaked last September at $54.24, amid concern that warmer-than-usual winter weather would crimp sales of outerwear and winter sports equipment. Investors also worried about the future of gun sales, after a Dec. 14 massacre at an elementary school in Newtown, Conn., provoked an outcry that could lead to congressional action banning certain types of rifles and ammunition clips.

After the shootings, Dick's announced it would suspend sales of so-called modern sporting rifles temporarily in all its stores. The worries seem misplaced as semi-automatic rifles represent an estimated 1% of total sales, and guns and ammunition in general account for a mid-single-digit percentage of sales. Not surprisingly, Dick's and other retailers, such as
Wal-Mart StoresWMT -0.6255331248222917%Wal-Mart Stores Inc.U.S.: NYSEUSD69.9
-0.44-0.6255331248222917%
/Date(1481308997159-0600)/
Volume (Delayed 15m)
:
4259535
P/E Ratio
15.206521739130435Market Cap
216168169224.158
Dividend Yield
2.8591851322373123% Rev. per Employee
210427More quote details and news »WMTinYour ValueYour ChangeShort position
(WMT) and
Cabela'sCAB -0.1278772378516624%Cabela's Inc.U.S.: NYSEUSD62.48
-0.08-0.1278772378516624%
/Date(1481308960150-0600)/
Volume (Delayed 15m)
:
111225
P/E Ratio
25.7119341563786Market Cap
4284109104.05274
Dividend Yield
N/ARev. per Employee
213141More quote details and news »CABinYour ValueYour ChangeShort position
(CAB), have seen a spike in sales of guns and ammo since the Newtown tragedy, as gun enthusiasts fear a coming crackdown on sales of firearms.

Dick's officials declined to comment; the company reports fourth-quarter earnings next month.

DICK'S WAS FOUNDED in Binghamton, N.Y., in 1948, by 18-year-old Dick Stack, as a bait-and-tackle shop. Today the retailer is run by his son, Ed Stack, 58, who controls nearly 20% of the company, mostly through super-voting Class B stock. Dick's has grown sharply through the years, sometimes through acquisitions, including the 2004 purchase of Galyan's Trading. A 2007 deal for Golf Galaxy made Dick's the nation's largest golf-products retailer.

The Bottom Line

Dick's has rallied 60%, to $49, in the past five years, but could tack on further gains of 20% or more. The company thinks it could roll out 50% more stores before saturating the country.

The company reports results in three categories. Hardlines, including fitness equipment, comprises 52% of sales; apparel contributes 29%; and footwear, 19%. Dick's target audience includes sports enthusiasts, families, and outdoorsmen. The company's emphasis on in-store boutiques organized by brand further differentiates it from competitors. Moreover, accredited fitness trainers and golf pros are on hand to offer customers' tips.

In the meantime, look for an 8% uptick in sales in the current year, driven by gains in unit growth, same-store sales, and widening profit margins, the result of a continued shift to soft goods, such as apparel, from products such as fitness equipment.

Americans love to participate in sports, and the numbers suggest that Dick's suits their needs. Chances are the original Dick would be awfully proud of that.

Game's On

Dick's controls 8.5% of the U.S. sporting-goods market, versus Foot Locker's 6%. Dick's shares are pricier than competitors', but are supported by fast-rising earnings.